HOLIDAY INN: Defranchising a PA Dutch Country Icon
October 7, 2008 by Sean Kelly
Filed under Business
(Franchise Pick) For decades, the Lancaster, PA Holiday Inn on historic Route 30 served as tourism’s gateway to PA Dutch country. Its prominent and kitschy sign, flanked by a giant Amish couple, was a favorite tourist photo opp – ranking right up there with the nearby “Welcome to Intercourse, PA” sign.
In recent years, the increasing disrepair of the graffitied roadside sign has signalled the overall decline of a once warm, welcoming and trustworthy member of the IHG-owned Holiday Inn franchise family. Holiday Inn Lancaster has been increasingly plagued with high management turnover, a decaying infrastructure and credit-unworthiness. After Atlanta-based Kronos Hotels and Resorts took ownership 15 months ago, Amish country’s Holiday Inn went downhill fast. It all came to a head last week when franchisor IHG International announced that the hotel has been “terminated from the Holiday Inn system.”
According to the Lancaster Sunday News:
The terse IHG statement reads, “Holiday Inn is very concerned about the reported issues at the former Holiday Inn hotel in Lancaster, PA
(Visitor’s Center).
“As a franchiser, we have brand standards that franchised hotels must comply with; however, we do not control the day-to-day operations of franchised hotels since they are independently owned and operated. “At this time, the hotel has been terminated from the Holiday Inn system.”
Being ousted from the Holiday Inn franchise system is a huge blow for the ailing hotel. Not only will they lose the branding power and name recognition that comes with being a Holiday Inn, they will no longer be part of Holiday Inn’s online reservation system. With a number of serious restaurant and health code violations, allegations of liquor laws, and termination of services by unpaid vendors (including having electricity shut off last week by PP&L), the termination of the Holiday Inn (Visitor’s Center) franchise was well-founded if not overdue.
According to the Lancaster Sunday News, Holiday Inn franchisor IHG has previously revoked the franchise agreements of several other Kronos Hotels & Resorts properties, including Holiday Inn franchises in Pittsburgh, PA and Lansing, MI.
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It’s always so sad when this happens. The Holiday Inn in Fort Washington, PA has been off and on the Holiday Inn list a few times. It’s not horribly bad but needs some maintenance and a facelift.
Apparently, some Holiday Inn (and Days Inn) operators can’t resist the temptation to milk the franchise for money by skimping on maintenance. Of course, that generates nice cash flow in the present but sets off a vicious cycle for the future. The shabbier a place becomes, either the fewer guests it gets or the less it can charge. Revenues go down, and there’s less available for maintenance, and the downward spiral continues.
I was once a fan of Holiday Inns but now stay at Hampton Inns because I’ve never seen one that was poorly maintained. Holiday Inn Express seems to be Holiday Inn’s answer to Hampton. These properties aren’t bad. It’s a shame that the Holiday Inn organization doesn’t put its foot down and immediately kick out those who even start on the downward spiral.
Ed G.:
Coincidentally, there’s a Hampton Inn right next door to this Holiday Inn which will, no doubt, continue to do well.
I agree that Holiday Inn should be aggressive in taking action against those who damage the brand. Tomorrow I’ll post some of the outrageous infractions. It never should have gotten this far.
There’s no way you can compete with the Homewood Suites, Hampton Inns, & Embassy Suites of the world operating at this level. It’s sad, because this is a prime location and they squandered years of relationships and goodwill.
How can we comment on this unless we know how many owner franchisees have been involved with this particular Holiday Inn?
Obviously, anyone who pays the kind of money it takes to buy a Hotel knows that maintenence and upkeep are part of the deal and if the original owner or last owner just milked it and then sold it off at a profit to someone who was impacted by NEW competition, etc… in the area, and this happened over a long period of time to a series of owners, the Holiday Inn people are within their rights and again, it is the franchisee who will take the HIT and his investment will not survive.
The saturation of the Hotel Market is just behind the saturation of the QSR sector and in our part of the country, the price wars are starting.
Apparently, the last owner of this Hotel isn’t making enough to do a facelift, etc… and is perhaps just trying to survive the bad investment that he made and that the Holiday Inn made possible because they approved him as a franchisee. Did he understand that he could be dumped because he wouldn’t make enough to dress up the dump he bought to the standards of the Holiday Inn?
Now that more people will be sleeping in their automobiles, maybe hotel prices will go down in the future —huh, Sean!
Let’s face it, I would not want to stay overnight in a motel with a lot of violations. Thank goodness, the chain does not continue to lend its name to a substandard facility.
I do hope the sign is rescued and rehabbed.
Maybe someone will even take on the motel and bring it up to par.
Actually the previous company was a public company and was downsizing their portfolio. The property was due for a renovation and would have gotten one with the old ownership had they had it. It was when this company came in and started tearing stuff up that it got like it is now. I know this because I was there for both of them